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Cover Story -- The Info Tech 100/Stock Picks
Consultant services analyst, Lehman Brothers
CATEGORY: Services, distributors, and resellers
STOCK PICKS: Scient (SCNT), Viant (VIAN), Razorfish (RAZF)
WHY: Keirstead likes the stocks of the new Internet consultancies because they're profitable and they have strong management teams. Above all, he likes the revenue growth they get from focusing exclusively on the Web. "These companies are growing the most and the fastest," Keirstead says.
No consulting firm is growing faster than top-pick Scient Corp., a two-year-old San Francisco firm that helps devise Net strategies and develops Web sites for its clients. Revenues are projected to grow 120% this year, to $350 million, while net income is expected to hit $19.8 million. One major reason is that Scient's management is chock-full of top-drawer execs from IBM and AT&T. The strong leadership has helped attract some of the best strategic minds in the Web business and some marquee clients, including Chase Manhattan Corp. and Web auctioneer eBay Inc. "Scient right now has its pick of the litter when it comes to clients," says Keirstead. He expects the stock to more than double, from $47 now to $100 over the next year.
Keirstead also is sweet on Viant Corp., another Net consultancy. It has a "terrific reputation for on-time, on-price delivery," Keirstead says. That has helped attract big-bucks clients--such as PC giant Compaq, phone-equipment maker Lucent, and photocopy king Kinko's. It also should help net income hit $16.6 million this year, up from $1.4 million last year. Says Keirstead: "When you ask private e-business consulting players what they want to be when they grow up, most identify Viant." He expects the stock to hit $50, from its current $23.
Keirstead's third choice is New York City-based Razorfish Inc. He says the five-year-old firm has the vision thing. It was the first e-consultancy to expand into overseas markets--40% of its revenues come from Europe. And it was one of the first to see the move to wireless Net applications. Such foresight should help the firm boost net income to $22.6 million this year, compared with $16.6 million last year. Keirstead thinks the $16 stock could nearly triple over the next year, to $40.